Question · Q3 2025
Ibrahim Punawala of Bank of America questioned Flagstar Bank N.A.'s expense outlook, noting that adjusted expenses appear to be flatlining at the current run rate despite planned hiring. He sought clarification on remaining cost-saving opportunities and the puts and takes that could influence expenses. He also asked about the outlook for non-interest-bearing (NIB) deposit growth, its expected trend as a percentage of the overall mix, and the timeline for new lending relationships to translate into core deposit growth.
Answer
CFO Lee Smith highlighted the significant $800 million year-over-year reduction in non-interest expenses. He identified future cost-saving opportunities in reducing FDIC expenses through liquidity optimization and improved profitability, lowering vendor costs, and achieving efficiencies from technology projects (e.g., data center consolidation). Regarding NIB deposits, Lee Smith expects growth from new C&I relationships (including operating accounts), the private bank's reorganization, and the 360 bank branches. CEO Joseph Otting added that the consolidation of data centers from six to two will yield significant cost reductions.